Refer to the figure below. If the current market price were $20: 
A. there would be an excess demand of 35 units.
B. the market would be in equilibrium.
C. there would be an excess supply of 25 units.
D. there would be an excess demand of 25 units.
Answer: D
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The purchasing power parity theory is a reasonably good explanation for nominal exchange rate determination:
A. in the short run. B. in the long run. C. when there are fixed exchange rates. D. when there are significant volumes of non-traded goods and services.
What is scarcity?
What will be an ideal response?
If a very small country trades with a very large country according to the Ricardian model, then
A) the small country will suffer a decrease in economic welfare. B) the large country will suffer a decrease in economic welfare. C) the small country only will enjoy gains from trade. D) the large country will enjoy gains from trade. E) both countries will enjoy equal gains from trade.
If the AS curve is upward-sloping, the government alone should raise its purchases by the amount of the AD shortfall in order to reach full-employment equilibrium.
Answer the following statement true (T) or false (F)